Stock market crash: Following the escalation of the US-Iran war and rising crude oil prices, the Indian stock market opened lower in early-morning trading on Wednesday. The key benchmark indices further extended their gap-down opening and crashed by over 2% during Wednesday's dealings. Thirteen of the 16 major sectors logged losses.
The Nifty 50 index opened lower at 24,259 and finally finished at 23,897, logging an intraday loss of 500 points. The BSE Sensex had a gap-down opening at 77,816. The 30-stock index touched an intraday low of 76,259, but finally finished at 76,522, logging an intraday loss of 1658 points. Likewise, the Bank Nifty index opened downside at 57,918 and touched an intraday low of 56,549. However, the index finally ended at 56,742, recording an intraday loss of 1,458 points.
According to data available on the BSE, in this sell-off on Dalal Street, BSE-listed stocks have lost ₹8 lakh crore in market capitalisation. The BSE-listed stocks had ended on Tuesday with a market valuation of ₹4,80,20,223 crore or ₹480 lakh crore, which has now slipped to ₹4,72,02,439 crore or ₹472 lakh crore.
The oil and gas index fell 1.5%, while crude-sensitive auto and FMCG indexes lost 1% and 1.5%, respectively. Oil marketing companies BPCL, HPCL and Indian Oil, paint makers such as Asian Paints, airline operator IndiGo and tyre makers fell as rising crude prices stoked margin concerns. Oil producers ONGC and Oil India, which typically benefit from higher crude prices, gained about 0.5% each.
Asian Paints, IndiGo and ITC were among the top percentage losers on the Nifty 50.
Pharmaceutical and healthcare shares both rose 0.5% as investors moved into sectors seen as relatively insulated from crude-price swings and monsoon-related risks.
Internet services firm Info Edge climbed 3.1%, and Kalyan Jewellers advanced 5.4% after upbeat June-quarter business updates.
According to stock market experts, the slide in Indian equities is driven by two primary factors: the escalation of the US-Iran war following US retaliatory strikes in Iran, and rising crude oil prices.
In addition, weak Q1 results expectations, continuous selling by FIIs and profit-booking amid heightened volatility have further weighed on sentiment.
Here we list out the top five reasons that are dragging the key indices of Dalal Street today:
1] US-Iran war: The primary reason for the selling pressure in the Indian stock market can be attributed to the escalating tension in the US-Iran war. The fresh strikes by both sides have fueled uncertainty in the Middle East, sparking selling pressure across bourses, including Dalal Street.
2] Soaring crude oil prices: Higher oil prices hurt India, the world's third-largest oil importer and consumer, by widening the import bill, stoking inflation and squeezing growth.
"With the renewed US-Iran tensions and the consequent spike in Brent crude to $76, the market is again back to uncertain territory," said VK Vijayakumar, chief investment strategist at Geojit Investments.
"The market was slowly gaining strength on positive foreign inflows and improving macro fundamentals, but the latest flare-up in tensions has put a temporary question mark," Vijayakumar said.
3] Buzz for weak Q1 results: Avinash Gorakshkar, a SEBI-registered fundamental equity analyst, believes the geopolitical tension in the Middle East has hit the global economy very badly, and it would take time for the global economy to come out of its repercussions. So, the upcoming corporate earnings for Q1FY27 are expected to remain weak, and hence, market participants are trying to discount that at higher levels.
4] FIIs' selling: On account of the rising risk sentiments and weakness in the Indian National Rupee (INR) against the US Dollar (USD), FIIs are continuously selling in the Indian equity market. This is also a reason the key benchmark indices of the Indian stock market have been unable to sustain at higher levels.
5] Rising risk sentiments: Due to the weakness in the Indian currency, risk sentiments have risen all of a sudden, which is visible in the India VIX today, which has surged over 5% on Wednesday. This has triggered profit-booking in the Indian stock market, with 13 of 16 sectors trading in the red.
(With inputs from Reuters)
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